Mais conteúdo relacionado Semelhante a Driving Profitable Growth through Major Strategic Innovations by Jeff Goldstein of Ingenuity Advisors, LLC and AcuPOLL Precision Research Inc. (20) Driving Profitable Growth through Major Strategic Innovations by Jeff Goldstein of Ingenuity Advisors, LLC and AcuPOLL Precision Research Inc.1. Profitable Growth Through Strategic Innovations:
New Businesses, Partnerships, and Acquisitions
Jeff Goldstein, President
AcuPOLL Precision Research, Inc.
October 18, 2012
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Confession: I do not meet the #1 criterion for
a highly acclaimed speaker
• I’m not from out of town
• However, I do have diverse experience:
– Discovered, invented, patented, trademarked,
developed, funded, launched,
searched, bid, acquired, licensed,
grown, and profited from innovation
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Focus Today on ROI
• Not sexy … but powerfully important
• Strong idea and a great product often are not enough
• Tough economy, and competitive maturing markets, require a
more strategic approach
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Understand Your Audience
Raise Your Hand If You Have…
• Analyzed a market to identify a big new business opportunity
• Developed a written concept for an innovation
Stand If You Have…
• Conducted quantitative market research on your concept, product, or package
IF YOU ARE SITTING, PLEASE WRITE THIS DOWN.
(800) ACU-POLL … we’d be happy to help!
Raise Your Hand If You Have…
• Been involved with a volume forecast
• Worked on a direct response or infomercial campaign
• Interest in raising money to invest in a new business or innovation
• Interest in tips on acquisitions
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4 Strategies for High ROI Innovation
1. Attractive Markets #1 Decision for finding profits and managing risk
2. Strong Concepts Dramatic & desirable differences
3. Strong Volumetrics Lessons from Snuggies
4. Trial Generation Costs Think like a direct marketer
If there’s time and interest …
1. Funding innovation How much does $1 of funding cost?
2. Growth acquisitions Tips for acquisition search
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CLIFF NOTES ONLY
4 Strategies for High ROI Innovation
1. Attractive Markets #1 Decision for finding profits and managing risk
2. Strong Concepts Dramatic & desirable differences
3. Strong Volumetrics Lessons from Snuggies
4. Trial Generation Costs Think like a direct marketer
If there’s time and interest …
1. Funding innovation How much does $1 of funding cost?
2. Growth acquisitions Tips for acquisition search
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1. Market Selection Sets the Stage for Success
Often the single most important decision you’ll make
• Play where you can win
• Defines risk and return
George Foreman Grill
Over 100 million sold since 1994
Est. $200 million paid to George
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Why selling products to beauty salons was a
great opportunity…
• Unlikely millionaires
• Weak competition
• Fragmented distributors
• Great margins
…until marketplace changes ruined it!
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Strategic Analysis to Pinpoint Great Markets
• Understand fundamentals – The 5 Cs
• Consumers, customers, competition, company, and economic characteristics
• Understand trends
Wayne Gretzky: “skate where the puck is going, not where it’s been”
Aging Beauty Look Younger
Healthy Living Nutrition Fitness Self-Treatment Germ-Free
Natural Organic Green Chemical-Free
Specialization Ethnic
Multi-Benefit Devices Licensing Celebrity/Music/Sports Endorsement
Convenience Design Value Premiumization
Pets as People … and other category-specific themes
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Strategic Analysis to Pinpoint Great Markets
Translate platforms to products … the devil’s in the details of
the proposition!
The Corporation in the Clouds story
• 12 Platforms … 200 ideas … “but I don’t see
a product I can launch!”
• Demographics
• Competition
• Company Competencies
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Consider How Opportunities Fit Your Portfolio
Greater Risk “Innovation Ambition Matrix”
New
Markets/
Channels
2 4
Existing
Markets/
1 3
Channels
Existing New
Products Products
“Managing Your Innovation Portfolio,” Bansi Nagji and Geoff Tuff, Harvard Business Review, May 2012
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2. The Power of Dramatic & Desirable Differences
Get the concept right!
• Febreze failed twice before national success Trial
• Odor Elimination test market Low
• Fabric Refreshing / Freshness test market Med
• Cleans Away Odor national launch High
More recently, “a breath of fresh air” grew global share 1.5 pts. last quarter!
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What’s in a Concept?
The unique & appealing proposition defining why target customers should buy your product or
service instead of competitors’
1. Customer Insight – The existing customer belief that illustrates the problem or unmet need
your product addresses. It can reflect strengths, competitor weaknesses, habits, emotional
concerns or wants, etc.
2. Benefit (#1 in importance) – The functional or emotional promise you make that addresses
the insight and motivates purchase
3. Reason-to-Believe supports or explains why customers should believe this promise
Scope Example
Insight: The worst bad breath is in the a.m. and results in 80% of consumption
Benefit: Scope fights morning mouth, the worst breath of the day
RTB: Scope has two powerful ingredients that kill 99% of bad breath germs
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Knowledge Drives Odds of Success
Expertise & Research Increase Potential … and Big Companies Invest in Both!
• Fundamentals: demographics, psychographics, needs, language, psychology, etc.
• Focus groups and ethnographic research
• Image, habits, practices, usage, attitudes, segmentation surveys
• Applications: insights, concepts, advertising, product performance, packaging, promotions
• In-market testing
Odds With Expertise
of
Success
Without Expertise
Amount of Customer Research Interaction
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Knowledge Drives Odds of Success
Expertise & Research Increase Potential … and Big Companies Invest in Both!
• Fundamentals: demographics, psychographics, needs, language, psychology, etc.
• Focus groups and ethnographic research
• Image, habits, practices, usage, attitudes, segmentation surveys
• Applications: insights, concepts, advertising, product performance, packaging, promotions
• In-market testing
Odds With Expertise
of
Success
Without Expertise
Amount of Customer Research Interaction
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Don’t Be Afraid of a Niche
Or to Zig When Others Zag
Businesses often don’t end up where they start:
Special K Aveeno Neutrogena Strivectin Pantene Arm & Hammer
Can you own a niche and unique benefit, and earn while you learn?
Febreze/Swiffer reached $1B in categories without competition…
where they could most easily create a dramatic and desirable difference!
– Febreze reinvented home fragrance for fabrics
• Only then expanded into plug-ins, air sprays, candles, and cars
– Swiffer reinvented cleaning for the convenience world, eliminating mops
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3. Understand Components of Volume
Example:
Fourt-Woodlock Model Snuggies vs. Pedegg
# Target HHs
% ACV Distribution Difference between accessible and available
% Awareness Marketed or inherited (foot traffic, ease to find, ease to notice)
% Convert to Trial Driven by dramatic/desirable difference!
# and price per first purchase
# Triers & Trial $ Revenue
% Repeat Rate Critical for growth over time
# and price per repeat purchase
Purchase frequency Can be more important than % Trial*
# Repeaters & Repeat $ Revenue *Febreze example
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4. Trial Generation Costs
Think Like a Direct Marketer!
Direct marketers are hawks on infomercial ROI! Revenue $x
COGS/Other -$y
They make sure they can cover trial generation costs Ad cost -$z
Profits $P
They creatively extend their revenue models
• Regimens & add-ons/upsells
• Recurring purchases
• Retail halo / As Seen on TV
You MUST have a visible path to ROI on trial generation!
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Caution
Never Believe …
“This is a big idea because all we need is 1% of a kabillion dollar market”
The Seafood De-Sheller Story
Trial Generation Question: What does it cost to
reach, interest, and close a sale on this 1%?!!!
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5 Ways to Reduce Trial Generation Costs
1. Sales- Is there someone whose customers may want or be required to
Funneling use your products or services?
Partnerships – Dunnhumby and Kroger, Macy’s, Home Depot
– Your Encore and P&G, Eli Lilly, etc.
2. Co- Does someone in a related category deliver or reach your
Promotion prospective customers?
– Tide samples in Maytag washers
– LifeLock at Office Depot; America Online discs everywhere
– Prenatal vitamin recommendation in pregnancy test kit instructions
– Intel Inside
– Digital affinity and lead gen programs
3. Joint Could a partnership bring together complementary
Ventures capabilities?
– P&G + Clorox Glad brand joint venture
– Catalina Nielsen joint venture
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5 Ways to Reduce Trial Generation Costs
4. Trademark Does someone have a trademark or source of credibility
or Other Brand that would make your product more successful?
License or – License: Tide Laundry Essentials, Febreze air filters, Mr. Clean
Car Wash, SpongeBob Cheese Nips, Larosa’s Garlic Bread
Endorsement
– Co-Brand: Crest + Scope, Tide + Downy, Kraft Bagelfuls with
Philadelphia Cream Cheese
– Endorsement: ADA Seal, celebrity endorsement
5. Co-Location Does someone have a location that would make your
product or service more successful?
– Fast Food: Taco Bell + KFC, Starbucks in Target, McDonald’s in
Walmart, Subway in gas stations
– Sephora in JC Penny, Sunglass Hut in Macy’s
– ATMs in hotels and casinos
– Great Water Capital and Dinsmore & Shohl
– Nail salons in airports
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4 Strategies for High ROI Innovation
1. Attractive Markets #1 Decision for finding profits and managing risk
2. Strong Concepts Dramatic & desirable differences
3. Strong Volumetrics Lessons from Snuggies
4. Trial Generation Costs Think like a direct marketer and collaborate!
If there’s time and interest …
1. Funding innovation How much does $1 of funding cost?
2. Growth acquisitions Tips for acquisition search
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Cost of Funds Affects ROI and is Highly Variable
• What does $1 cost?
– Consumer Loans:
• Payday lender, credit card, home equity, margin, pledged asset loan
• Rate % depends on the source, pitch quality, and amount you shop
– Sources: friends/family, un/sophisticated angel, venture firm, mezzanine, etc.
– Pitch quality: management team, evidence of opportunity, proven and
scalable revenue model, market size, margin on acquired users, etc.
– Amount you shop: Chicken Soup for the Soul met with >100 publishers!
• ROI objectives vary with the cost of funds, from a few % to 25-35%
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A Little About Acquisitions
Some Advantages
• Often a proven business model
• Visibility of current returns
– Much less risk than a new business of investing and achieving $0
• May provide brands, scale, competencies or other benefits
• Buying a “sellable” asset
Some Disadvantages
• Feasibility and timing are unpredictable (i.e. moon and stars must align)
• Seller expectations & competition set the price
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Acquisitions Can Be Appealing Relative to
New Brand/Business Odds of Success
• Startup and new brand success rates are extremely low
• P&G is the gold standard for new brands in CPG but has many failures
– Developed 32 in ’80s: 16 launched (50%), 8 national (25%), 5 profitable
early ‘90s (16%)
– Many failures in ’90s/’00s: HomeCafe, Fit, Torengos, Dryel,
Thermacare*, Kandoo*, Culinary del Sol, Juvian, etc.
*Never reached expectations, subsequently sold
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Tips for Acquisition Search
1. Clearly define and align on objectives/criteria
• Includes why acquire (sales, brand, technology, etc.)
2. Focus on attractive markets
3. Focus on opportunities that are dramatically and
desirably different
4. Understand how company competencies fit
5. Formulate new vision before assessing opportunity
6. Determine what it’s worth … and when to walk
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Future Interest Areas
• Innovation Success Models
• Schemas, Conceptual Blends, and Frames of Reference
• Any reason to call us at (800) ACU-POLL
• The 3 Gs: Grow, be Grateful, and Give back
Questions?
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